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     US cases

This page considers selected US prosecutions of spamming.

It covers -

• 2003-4 - Carmack, Jaynes, Tombros and others
• 2005-6 - Richter, Hawke, Greco, Levine and others
• 2007-8 - Soloway, Kilbride, Wallace and others

Australian prosecutions and warnings are discussed in more detail here, as part of the note on the Australian and New Zealand spam regimes. They include a landmark 2006 decision by the Federal Court of Australia which imposed a $5.5 million penalty on a Perth spammer.

     2003-4 cases

In 2003 a district court in Atlanta awarded US ISP EarthLink US$16.4 million in damages against Howard Carmack (aka the 'Buffalo Spammer'), a New York resident who had alleged used illegal means to send over 825 million spam emails. Carmack was permanently banned from spamming and from related activities that include selling email addresses. He had reportedly built a US$24 million fortune and boasted "Nothing is in my name, so you'll never catch me".

That claim was incorrect and in 2004 he was found guilty (PDF) in a separate trial in New York of identity theft, fraud and falsification of documents (including email header and sender information). He was sentenced to seven years in prison.

Jeremy Jaynes, a North Carolina resident, was convicted in Virginia during 2004 of sending spam with forged headers via servers located in that state. The decision reflected Virginian anti-spam law rather than the federal 2003 CAN-SPAM Act. Jaynes was of junk e- sentenced to nine years in prison.

Spamhaus had characterised him as the eighth most prolific spammer in the world. He had used different identities and front businesses for get rich quick schemes and some particularly unlovely animal pornography spam. Conviction of his sister and alleged associate Jessica deGroot was overturned in 2005.

Jaynes' conviction was upheld by the Virginia Supreme Court in 2008, affirming the nation's first felony conviction for spamming. The court held that the state's anti-spam law does not violate free speech rights, rejecting his claim that the law violated both the First Amendment and the interstate commerce clause of the US Constitution. It commented that misleading commercial speech is not entitled to First Amendment protection. The Court reviewed its own decision in September 2008, concluding that the state law "is unconstitutionally overbroad on its face because it prohibits the anonymous transmission of all unsolicited bulk e-mails, including those containing political, religious or other speech protected by the First Amendment to the U.S. Constitution".

Nicholas Tombros entered into a plea agreement with prosecutors in a 2004 case under the criminal provisions of the federal CAN-SPAM Act. He had been accused of sending adult-content email spam via unauthorised use of unsecured wireless networks. Tombros allegedly drove through Los Angeles with a wi-fi laptop sniffing out unsecured residential access points. He had obtained the email addresses from working in a credit card aggregation company.

     2005-6 cases

In 2005 Microsoft gained a US$7 million settlement in an antispam lawsuit against Scott Richter, self-proclaimed 'King of Spam', who had allegedly been involved in distribution of a mere 38 billion spam messages. Richter had settled a case brought by New York Attorney General Eliot Spitzer in 2004.

During the same year AOL disposed of gold bars and a Hummer H2 vehicle (replete with the numberplate 'CASHOLA') that were among assets as part of a US$13 million judgment against New Hampshire spammer Braden Bournival and partner Davis Wolfgang Hawke, a former neo-nazi. The litigation was AOL's first lawsuit under the CAN-SPAM Act. In 2006 AOL announced that it would conduct a treasure hunt for gold and platinum ingots reportedly secreted by Hawke - inevitably dubbed the Spam Nazi - who defaulted on the court judgment and then disappeared.

18 year old Anthony Greco of New York was arrested in 2005 for violating the CAN-SPAM Act by allegedly sending over 1.5 million instant messages advertising mortgage refinancing services and adult pornography to users of MySpace.com's IM service. He had reportedly fraudulently created thousands of accounts at MySpace and then sent spim. Bizarrely, he had then allegedly contacted MySpace.com and demanded exclusive rights to send commercial email to MySpace.com users.

In 2005 Iowa-based ISP CIS Internet Services was awarded US$11.2 billion in a court judgment against Miami-based James McCalla over 280 million email messages sent to CIS accounts. The spam advertised gambling, adult content, mortgage and debt-consolidation services. The judgment also prohibits McCalla from accessing the net for three years. It follows a separate US$1 billion judgment after litigation by CIS against three other spammers.

In 2006 24 year old Ryan Pitylak settled lawsuits in US federal court with the state of Texas and Microsoft. The settlement cost him at least US$1 million and took away most of his assets. He admitted sending 25 million spam messages every day at the height of his activity in 2004.

As part of the settlement with Microsoft, Pitylak promised to never send "false, misleading or unsolicited commercial email". He proclaimed, disingenuously or otherwise, that the experience had been "a serious reality check" and said that he was

pleased to announce that I am now a part of the antispam community, having started an Internet security company that offers my clients advice on systems to protect against spam.

Pitylak and associates Mark Trotter, Gary Trappler and Alan Refaeli handed over more than $US10 million.

US spammer Scott Levine, operator of spam facilitator Snipermail.com, was convicted in 2005 of illegally accessing detailed personal information about millions of people from databases maintained by data trading giant Acxiom. He is reported to have aimed to sell profiles to viagra spammers and even to consumer credit reference group Experian.

     2007-8 cases

In May 2007 Robert Soloway was arrested in Seattle on charges of mail fraud, identity theft and money laundering, having allegedly been one of the world's largest spammers between November 2003 and May 2007.

A US lawyer said Soloway was the first person to be prosecuted under federal law against identity theft for sending out spam. He had reportedly frequently changed the web address of his internet marketing business to avoid being caught. Prosecutors are seeking seizure of US$773,000 said to have been made from his firm.

During the following month Verizon Wireless announced that it filed a lawsuit in New Jersey against Nevada-based I-VEST Global and various 'John Does' for allegedly sending over 12 million unsolicited commercial text messages (aka speam) to Verizon mobile phone customers. The messages are reported to have offered information about buying shares or real estate.

Jeffrey Kilbride and James Schaffer were sentenced to over five years in federal prison in October 2007 and ordered to forfeit US$1.3 million after prosecution for sending millions of unsolicited adult emails. The pair were convicted on charges including conspiracy, money laundering, fraud and "transportation of obscene materials". They had bought lists of email addresses, sending recipients spam promoting adult content sites. The court heard that they earned over US$2 million in commissions, based on the number of people who accessed the sites via the spam. Kilbride and Schaffer tried to evade the CAN SPAM Act by pretending that the spam came from Amsterdam rather than from Phoenix.

In January 2008 a federal grand jury in Detroit indicted Alan Ralsky (dubbed the 'spam king') and 10 others in what the US Justice Department described as an international illegal bulk email and stock fraud scheme centred on "pump and dump" share price manipulation. US Attorney Stephen Murphy said

Today's charges seek to knock out one of the largest illegal spamming and fraud operations in the country, an international scheme to make money by manipulating stock prices through illegal spam e-mail promotions.

The group had allegedly sent spam touting thinly traded Chinese 'penny stocks', driven up the share price and then reaped substantial profits by selling the shares at the inflated prices. Ralsky's group allegedly used "various illegal methods" to maximize the amount of spam that evaded spam-blocking devices and tricked recipients into opening, and acting on, advertisements in the spam.

The indictment followed a three year investigation, with investigators alleging that the spammers earned US$3 million during the summer of 2005 alone.

In April 2008 a federal judge sentenced Eddie Davidson (aka the Colorado Spam King) to 21 months in prison and ordered him to pay over US$714,000 in fines to the US Internal Revenue Service after conviction for spam promoting watches, perfume and penny stocks. Davidson forged the header information in that spam so that it purported to come from legitimate companies. His promotion of penny dreadfuls was tied to the trading volume of the stocks, with one promoter paying him US$1.4 million for his services. Deposits into his account between 2003 and 2006 were around US$3.5 million. Edwards subsequently walked out of the low security prison and engaged in a family murder-suicide.

In May 2008 US federal court judge Audrey Collins in Los Angeles gave MySpace a US$234m judgement over spam sent to members of that social network service. The award, against spammers Sanford Wallace and Walter Rines, followed US$4.7 million legal fees for MySpace.

The spammers had appropriated existing MySpace accounts by stealing passwords or created new accounts, thence sending messages - typically requests to look at a site (including sites with adult content) - that purported to come from trusted friends. MySpace claimed that over 735,000 spam messages had been sent and sought damages under CAN Spam (US$100 per violation, tripled when spam is sent "wilfully and knowingly"). It sought a further US$$1.5m under California's anti-phishing laws.

Rines and Wallace, who had attracted condemnation over the preceding decade, were reported to be uncontactable and it is likely that MySpace will not collect the full amount.

Problems with collection presumably face Robert Kramer III, awarded US$236 million by Judge John Jarvey of Iowa federal court in October 2008 after Henry Perez and Suzanne Bartok of Arizona sent millions of spam messages to Kramer's ISP from 2001 to 2003. Perz and Bartok had relied on the aptly named Bulk Mailing 4 Dummies program, apparently targeting Kramer's CIS because they thought it was dominant ISP CompuServe. The court disagreed with the claim that the messages weren't spam, which it characterised as simply "not credible".

Facebook was awarded US$873 million in US litigation against Canadian Adam Guerbuez and his business, Atlantis Blue Capital. Facebook alleged that Guerbuez tricked its users into providing their usernames and passwords, with his access to their personal profiles being exploited to send over 4 million messages promoting a variety of products, including sexually explicit spam.

Guerbuez "has been difficult to find" since Facebook launched its court action. It is unlikely that Facebook will actually gain a sum that is more than double its estimated profit for the year.




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